Axis Bank shares fell on Thursday after the bank’s disappointing Q1 results led brokerages to cut target price.

What Happened: Axis Bank saw its net profit rise 4.1% from the previous year to ₹6,034.64 crore, which fell short of analyst estimates of ₹6,458 crore.

The bank's net interest income rose 12.5% to ₹13,448.23 crore. Its net interest margin (NIM), a key profitability metric dropped to 4.05% from the 4.1% posted in the same quarter last year. The Bank’s gross non-performing assets (NPA) and net NPA levels went up to 1.54% and 0.34%, respectively.

Brokerage Views: Citi downgraded Axis Bank to "neutral" and cut target price to ₹1,320. The bank's asset quality deteriorated and growth and return on assets have moderated.

The brokerage attributed higher GNPA and credit costs to lower recoveries. Loan deposit ratio increased 2%, with corporate advances contributing to growth. Reported NIM was flat and core NIM moderated, the brokerage added. 

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Nomura also maintained "buy" call and slashed target price to ₹1,435 and said the bank is entering a challenging phase. The sharp increase in credit costs was due to unsecured retail and lower non-performing loan recoveries, the research firm said.

The bank saw softer loan and deposit growth trends, adding that operating expenses surprise was a positive. The brokerage increased credit cost estimates to 70 basis points over FY25-26. It also cut earnings per share estimate for FY25-26 by 3%-5%.

Macquarie maintained "outperform" call with a target price of ₹1,420. The brokerage said the net profit was 11% below expectations due to higher-than-expected credit costs. It said deposit growth was also weaker than its larger peers and NIMs would also have been down 6 to 7 basis points if not for the interest on income tax refunds the bank received this quarter. 

Nuvama maintained the "buy" call and cut target price to ₹1,430. The brokerage reasoned that the bank continues to trade at a discount compared to its peers and a lack of other investment options in large cap banking, financial services and insurance companies. 

Price Action: Shares of Axis Bank were down 4.35% to ₹1,185.30 on Thursday morning.

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